Opinion on  Immucor Inc (BLUD)     Sector: Healthcare  >  Industry: Medical Equipment & Supplies
Immucor (BLUD)

As I reported earlier today, after reviewing my AZZ stock purchase closely (after I hastily purchased some shares) I realized that fiscal year 2008 had been guided lower. The stock is still an interesting selection, but it doesn't really fit my own strategy of looking for stocks with growing revenue and increasing earnings. Especially when the company announces that the upcoming year will be a downturn for its results. I can go down a list of excuses why I missed that story before I purchased the stock, but excuses are excuses and I simply made a mistake.

Looking through the list of top % gainers today, I saw that Immucor (BLUD) a stock that I had previously reviewed almost exactly a year ago, when the stock was trading at $20.51, adjusted for a 3:2 stock split on May 16, 2006, was trading at $33.76, up $2.83 or 9.15% on the day. After reviewing some of the data a little closer (I hope), I decided that this stock made much more sense for me than my AZZ stock, and decided to over-ride my selling rules, and essentially undid my purchase in AZZ and placed Immucor (BLUD) in my trading portfolio. I went ahead and replaced my AZZ with 180 shares of BLUD which I purchased at a price of $33.80.

Let's take a closer look at Immucor and I will show you (and double check!) my findings on this company, explaining why this is a better fit for my own strategy.

IMMUCOR (BLUD) IS RATED A BUY

What exactly does this company do?

According to the Yahoo "Profile" on Immucor , the company

"...and its subsidiaries engage in the development, manufacture, and sale of reagents and automated systems. These are used primarily by hospitals, clinical laboratories, and blood banks in various tests performed to detect and identify certain properties of the cell and serum components of human blood prior to blood transfusion."

How did they do in the latest quarter reported?

It was the announcement of third quarter 2007 results yesterday after the close of trading that led to the big upward pressure on the stock price today. Revenue for the fiscal third quarter ended February 28, 2007, came in at $57.1 million, up 21% from $47.1 million in the same period last year. Net income came in at $15.0 million, up 28% from $11.7 million during the same period last year. Diluted earnings per share came in at $.21/share up from $.17/share last year.

The company beat expectations of earnings of $.20/share on revenue of $55 million.

These results did not go unnoticed--the Motley Fool commented on these results:

"There were no apparent soft spots in the quarterly earnings release. On a per-share basis, Immucor's earnings increased by 24% over the year-ago quarter, and revenue for the quarter reached $57.1 million for an increase of 21%. Other positive takeaways were that sales of traditional reagent products increased 22% over the prior-year quarter and Immucor's instrument sales increased by 22%.

One thing that never hurts is when you're able to name your own price. And maybe the most notable revelation from management is about the pricing power the company now has. About 82% of the company's revenue increase from the year-ago quarter can be attributed to price increases in the U.S. This pushed the company's gross margin to 70.7%, up from 68.2% in the year-ago quarter."

What about longer-term financial results?

Examining the Morningstar.com "5-Yr Restated" financials on BLUD , we can see a beautiful picture of steadily increasing purple bars on the chart showing the revenue growth with revenue climbing from $84 million in 2002 to $184 million in 2006 and $203 million in the trailing twelve months (TTM).

Earnings were almost as nice, except for a dip from $.21/share in 2003 to $.18/share in 2004, they climbed from $.16/share in 2002 to $.59/share in 2006 and $.75/share in the TTM.

The company has slowly increased its outstanding shares from 55 million in 2002 to 69 million in the TTM. This approximately 25% increase in the float, occurred while revenue was increasing about 150% and earnings were up over 300%. This is a tolerable dilution in the shares from my perspective.

Free cash flow has been positive and fairly steadily growing from $16 million in 2004 to $52 million in 2006. Free cash flow during the TTM has been slightly less at $41 million.

The balance sheet on Morningstar.com appears solid with $75.2 million in cash, which by itself can easily cover both the current liabilities of $25.3 million and the $19.8 million and have approximately $30 million left over! Calculating the 'current ratio', which I consider healthy if at 1.25 or higher, we find a total of current assets of $151.2 million, which when divided by the $25.3 million, yields a current ratio of 5.98, one of the highest current ratios on this blog!

What about some valuation numbers?

Reviewing the Yahoo "Key Statistics" on Immucor , we can see that this is a mid cap stock with a market capitalization of $2.32 billion. The trailing p/e is rich at 47.22, but the forward p/e is better (fye 31-May-08) estimated at 34.10. In spite of the rich p/e, the growth rate is sufficient to bring the PEG ratio (5 yr expected) below 1.0 to 0.92, suggesting a very reasonable valuation based on the anticipated growth in earnings.

Examining the Fidelity.com eresearch website , we can see that the stock is reasonably valued in terms of the Price/Sales (TTM) coming in at 10.39, with an industry average of 28.24. Besides being relatively cheap by this parameter, when examining the profitability of the company as measured by the Return on Equity (ROE), we can see that BLUD comes in at a ROE (TTM) of 33.48%, double the industry average of 16.80%.

Finishing up with Yahoo, we find that the company has 68.83 million shares outstanding with 67.98 million that float. As of 3/12/07, there were 4.83 million shares out short, representing 7.1% of the float or 6.7 trading days of volume. This is even higher than the prior month's short interest of 4.45 million. This short ratio of almost a week and a half of average trading days is well ahead of my own cut-off of 3 days of short interest being significant. With the terrific earnings report yesterday, one can almost hear the panic purchasing of the short-sellers today scrambling to cover their speculative sales. O.K., I am just guessing, but seriously, with all of the great numbers on this company, who would want to be short?

No dividends are reported on Yahoo and the last stock split was the 3:2 split I mentioned earlier which was declared on May 16, 2006.

What does the chart look like?

If we examine the "Point & Figure" chart on Immucor (BLUD) from StockCharts.com , we can see what appears to be a very steady increase in stock price from $1.75/share in March, 2002, to the current level of $33.76, pushing near the high set in January, 2007, when the stock traded as high as $34. The company appears to be trading strongly and I don't see any weakness in this chart from my own amateur perspective.

Summary: What do I think?

Well, I certainly liked what I first read earlier today (and I read it a bit closer than my quick evaluation of AZZ yesterday), and I thought this was too good a match for my blog to not own some shares. It was an easy decision to trade out of my AZZ and into BLUD. I hope it continues to do well.

The earnings report yesterday was solid. Nobody is lowering guidance on this stock! The company beat expectations on both earnings and revenue. And their Morningstar.com report is almost perfect with steady revenue growth, almost perfect earnings growth, a slowly growing number of shares in the face of a rapid improvement in financial numbers, growing and solid free cash flow, and a very strong balance sheet.

On top of this, the Price/Sales is low relative to its group, the Return on Equity is high, and there are loads of shares out short ready to be 'squeezed'. Valuation wise, the earnings are growing so fast that even with the rich p/e, the PEG is still under 1.0. I like this stock a lot. I didn't marry it lol, but I put it in my portfolio.

Hello Friends!  Thanks so much for stopping by and visiting my blog, Stock Picks Bob's Advice!  As always, please remember that I am an amateur investor, so please remember to check with your professional investment advisers prior to making any investment decisions based on information on this website.

I apologize for not reviewing very many stocks the past week.  I have been busy with things at work and at home and wanted to step back a bit for a short time from active posting.  However, I shall continue to keep you posted on activity in my Trading Account and shall try to get some new ideas up on this website soon.  

Earlier today I noticed that my Immucor (BLUD) stock had passed my 8% loss tolerance and I sold out my position of 180 shares at $31.04.  I had purchased these shares just last month on April 5, 2007, at a price of $33.86.  Thus, this represented a loss of $(2.82)/share or (8.3)% since purchase.  My trading rules require me to sell any position, regardless of my own affection for the stock :), or belief in its long-term viability and prospects, if it hits that 8% loss level, and out it went.

Since this is a sale on "bad news", this doesn't give me permission to replace the stock.  Thus, I am back down to 19 positions.  However, my Meridian Bioscience (VIVO) isn't too far from a sale at a gain (?), time will tell on that one, and if so, I shall be able to buy a new position.  But this will again require that one of my remaining 19 positions hits an appreciation target.

Anyhow, I am glad to be blogging this morning, at least for this post.  Hang in there, I shall be back actively blogging shortly!

Thank you so much for visiting and participating in this website.  If you have any comments or questions, please feel free to leave them on the blog or email me at bobsadviceforstocks@lycos.com.

Bob 

Hello Friends!  Thanks so much for stopping by and visiting my blog, Stock Picks Bob's Advice!  As always, please remember that I am an amateur investor, so please remember to consult with your professional investment advisers prior to making any investment decisions based on information on this website.

It is the weekend, and that means that it is time to write up a review of my past stock picks.  Last weekend I reviewed the stocks from the week of March 27, 2006.  Moving one week ahead, let's take a look at all of the stock picks from the week of April 3, 2006.  These reviews assume a buy and hold strategy.  In reality, I advocate a disciplined portfolio management strategy that directs me to sell losing stocks quickly and completely and sell gaining stocks slowly and partially at targeted appreciation levels.  I have discussed and shall continue to discuss these techniques throughout my blog.

But for the ease of measurement, let's find out what would have happened if we had indeed purchased equal dollar amount of each stock discussed that week about a year-and-a-half ago.

On April 4, 2006, I posted CheckFree (CKFR) on Stock Picks Bob's Advice when the stock was trading at $54.14.  CKFR closed at $46.82 on September 21, 2007, for a loss of $(7.32) or (13.5)% since posting.

Since CheckFree is to be acquired at $48 in cash on December 31, 2007, subject to regulatory approval,

CHECKFREE (CKFR) IS RATED A HOLD

Looking at the 'point and figure' chart on CheckFree (CKFR) from StockCharts.com, we can see the relatively weak performance of the stock prior to the announcement of the acquisition.

On April 5, 2006, I posted Apple Computer (AAPL) on Stock Picks Bob's Advice when the stock was trading at $67.21.  AAPL closed at $144.15 on September 21, 2007, for a gain of $76.94 or 114.5% since posting.

On July 25, 2007, Apple announced 3rd quarter 2007 results.  Revenue came in at $5.41 billion up from $4.37 billion the prior year same period.  Quarterly profit was $818 million, up sharply from last year's $472 million profit.  On a per share basis this came in at $.92/diluted share up from $.54/share last year.

The company beat expectations of analysts who were expecting earnings of $.72/share on revenue of $5.29 billion.

The "5-Yr Restated" financials on AAPL from Morningstar.com are intact. 

APPLE COMPUTER (AAPL) IS RATED A BUY

Looking at the "point & figure" chart on AAPL from StockCharts.com, we can see a chart that appears phenomenally strong!  

On July 25, 2007, Immucor announced 4th quarter 2007 results.  Revenue for the quarter ending May 31, 2007, came in at $61.1 million, up 22% from $50.0 million.  Net income for the quarter was $18.2 million, up 51% from $12.1 million last year.  Diluted earnings came in at $.26/share, up 53% from the $.17/share the prior year.

The Morningstar.com "5-Yr Restated" financials on BLUD are intact.

IMMUCOR (BLUD) IS RATED A BUY

Looking at the "point & figure" chart on BLUD from StockCharts.com, we can see the very strong price movement from as far back as March, 2002.  The stock exhibited some weakness in late 2005, but never 'broke down' below the support lines.

Finally, on April 7, 2006, I posted Aladdin Knowledge Systems (ALDN) on Stock Picks Bob's Advice when the stock was trading at $22.96.  ALDN closed at $20.99 on September 21, 2007, for a loss of $(1.97) or (8.6)% since posting.

On July 19, 2007, Aladdin reported 2nd quarter 2007 results.  For the quarter ended June 30, 2007, revenue came in at $25.5 million, up 22% from $20.9 million the prior year.  Net income came in at $3.9 million or $.26/diluted share, up from $3.3 million or $.22/diluted share the prior year. 

The company beat expectations of revenue of $24.1 million and profit of $24.1 million according to analysts polled by Thomson Financial.  In addition, the company raised guidance for 2007 full year results for a profit of $1.00 to $1.12/share, up from prior guidance of $.90 to $1.09/share.  In addition, they raised expectations on revenue to between $100 million and $106 million, from the prior guidance of $95 million to $102 million.

The Morningstar.com "5-Yr Restated" financials on ALDN are intact.

ALADDIN KNOWLEDGE SYSTEMS (ALDN) IS RATED A BUY

Reviewing the "point & figure" chart on Aladdin from StockCharts.com, we can see that this is a very unimpressive price chart.  The stock has been volatile since June, 2004, when the stock peaked at $27.  The stock dipped as low as $13 in July, 2004, only to see the stock price climb right back to a peak at $32 in November, 2004.  The stock then dipped back to a low of $14 in July, 2006.  The stock appears to be moving higher once again.  This stock chart is certainly not over-extended, however, the volatility is of concern and is the big negative factor for this stock.

So how did we do with these stock picks?  In a word phenomenal!  Two stocks showed small losses and two stocks had large gains.  The average performance for these four stocks was a gain of 42.7%!  Certainly past performance is not a reliable indicator for future performance but wasn't that a great week for picking stocks?

Thanks again for stopping by and visiting!  If you have any comments or questions, please feel free to leave them on the blog or email me at bobsadviceforstocks@lycos.com.  If you get a chance, drop by and visit my Stock Picks Podcast Website, or my Covestor Page where my trading portfolio is continually being monitored, or my SocialPicks Page where my blog is reviewed by the people over at SocialPicks!

Regards and wishing you a great week trading!

Bob